Job market may be on mend, data show
Unemployment applications down, but economists remain skeptical
WASHINGTON - The number of people seeking unemployment benefits dropped last week to the lowest level since early April, a sign the job market may be healing after a recent slump.
The Labor Department said yesterday that weekly applications fell 24,000 to a seasonally adjusted 398,000. That’s the first time applications have fallen below 400,000 in 16 weeks.
The four-week average, a less volatile measure, dropped to 413,750, the lowest since the week of April 23.
Stocks rose after the report was released. But they closed lower for the day after uncertainty in Washington about the debt crisis led to a late sell-off.
Economists cautioned that the lower level of unemployment benefit applications only reflects one week of data and that doesn’t necessarily signal a trend.
The drop “is clearly good news,’’ said Joshua Shapiro, an economist at MFR Inc. Still, “we would prefer to see further data before concluding that the earlier downtrend in claims is being re-established.’’
Separately, the National Association of Realtors said more people signed contracts to buy homes in June for the second straight month. But the increase was not enough to signal a rebound in the weak housing market.
The Realtors group said its index of sales agreements for previously occupied homes rose 2.4 percent in June to a reading of 90.9. The gain and an 8.2 percent increase in May did not make up for a huge drop-off in April when contract signings had fallen 11.3 percent.
A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month when buyers could qualify for a federal tax credit.
The number of people seeking unemployment benefits remains higher than would be expected in a healthy economy. Consumers are holding back on spending because of stagnant wages, high unemployment, tighter credit, and depressed home prices. That is restraining economic growth.
Unemployment applications had fallen in February to 375,000, a level that signals healthy job growth. But they then surged to an eight-month high of 478,000 in April and have declined slowly since then.
Some of the drop likely reflects seasonal volatility. Applications were elevated earlier this month partly because of temporary layoffs in the auto and other manufacturing industries, which are ending.
The total number of people receiving unemployment benefits, meanwhile, dipped to 3.7 million, which does not include millions of people receiving extended benefits under emergency programs enacted during the recession. All told, 7.65 million people got benefits in the week ended July 9, the latest data available.